Government Confirms UK State Pension Age to Rise to 66 by 2020

Nov 3, 2010
Carol Finch

UK State Pension Age to Rise to 66 by 2020 - Photo by dynamix

Changes to the state pension age made in the government's October spending review have now been confirmed. By 2020, the retirement age will increase to 66.

The UK's coalition government announced in the Queen's Speech in May 2010 that the state pension age (SPA) would be re-assessed and, in the October spending review, that it was likely to be raised to 66. On the 3rd of November 2010, this increase was confirmed. The state pension retirement age for men and women in the UK will now increase to 66 by 2020. How will this work?

The State Pension Age Increase is Moved Forward From 2026 to 2020

Reviews of the state pension age have been underway for some time. The Pensions Act of 2007 projected an increase from the current retirement age of 65 for both men and women to start in 2026. At this point, the SPA would be changed to 66 before rising to 67 by 2036 and 68 by 2046. The current government has re-assessed these time-scales, in light of increased longevity rates and the need to bolster the pensions system, and has confirmed that the process will speed up.

How Will the State Pension Retirement Age Rise?

The current UK government will accelerate the increase in retirement age, cutting six years off the changes outlined by Labour when they were in power. Women will initially see the SPA change to 65 by 2018 to put them on a par with men. This will then be boosted for both genders to the age of 66 in increments during 2019 and 2020.

By 2020, both women and men will have a state pension age of 66. Although the changes made will speed up, they will not start to be made until April 2016. During the latter part of the increase process, the SPA will rise gradually rather than all at once. This is likely to see graduated increases of three months at a time that are made every four months.

What do the Changes in State Pension Age Mean?

According to the Department of Work and Pensions, 4.9 million people will be affected by these increases with 4.4 million seeing a rise of one year or less. From a government perspective, these changes could help protect the pension system itself as projected savings are estimated at just over £30 billion. If these savings were not made then the costs may well have needed to be covered by UK workers.

In general terms, the state pension age increases will mean that both men and women will have to work longer than they do currently in order to qualify for the state pension. This may suit some, but others may not want to extend their working lives and may need to find other sources of income if they retire earlier than the new SPA.